Unlike other media companies, Yahoo has decided to use Facebook’s new social tools on its own site, not on the social network.

Facebook today just made it easier for media companies to help users discover new music, articles, and books by seeing what their friends are reading, watching, and listening too. As a result, some companies are putting versions of their products–called “canvas apps”–directly in Facebook, like music companies that will let people listen to their music right inside the social network.

Yahoo, however, is taking a different tack. It’s exporting Facebook’s functionality to its network on the theory that having readers consume Yahoo’s content on Yahoo’s network will produce both a better experience for users and an overall greater increase in consumption of Yahoo content.

How It Works

When a user turns on the new functionality, it enables Facebook to start keeping track of what they consume on partner media sites–what tracks they’re listening to on a music site, for example, or what articles they’re reading on Yahoo. The media companies can then display that information to that user’s Facebook friends, as a way of helping them find new things they might be interested in.

Yahoo is using that functionality to display a reader’s Facebook friends’s pictures at the top of every page on its Yahoo News site (in the United States). Clicking on a friend’s picture displays a list of the latest Yahoo News articles that friend has read.

Each article page also displays the pictures of a user’s Facebook friends who have already read the article. And a “Your Friends” tab displays an aggregate list, in reverse chronological order, of what all the user’s Facebook friends have been reading.

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“It becomes an incredibly engaging way to navigate through the news,” Jonathan Katzman, Yahoo senior director of product management for social and personalization, tells Fast Company. “As soon as you see a friend’s face, you invariably want to click on that face and see what they’re reading.” Imagine boning up for water cooler conversation by knowing what your boss read before she came to work. Imagine your boss knowing what you’re reading whileyou’re at work.

The Privacy Factor

The new functionality only works on Yahoo if both parties have turned it on. A user will only see the pictures, and reading lists, of friends who have turned the functioanlity on. But that user also needs to have turned the functionality on–to share their reading lists–in order to see their friends’ lists.

“If I want to partake in the experience, I have to share,” Katzman says. The intent, of course, is to incentivize users to participate in the program, therebay accelerating adoption–and accelerating the returns to Yahoo in the form of increased content consumption.

Katzman says that, in testing the new features, the response of readers younger than 30 or 35 years old has been “Cool, I’ll read more news.” In contrast, the response of among testers on the older side has been to want to maintain some degree of control. To that end, Yahoo gives users the ability to delete individual articles from their reading history.

Katzman says the contrast in the two responses demonstrates the gap in attitudes about sharing between older and younger users. Older users grew up in an era where very little about them bobbed about in public, and so they might feel trepidatious, for example, about it becoming apparent that they spend more time reading about Hollywood than Afghanistan, for example.

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But for younger users, “this is how they’ve grown up,” Katzman says. “By the time they’re 20, they’ve been on [Facebook] for seven years. They think [sharing] is how you get information.”

Your Place Or Mine

Like some other media companies that are taking advantage of Facebook’s new functionality, Yahoo could have chosen to embed its content within the social network and have users read its articles there.

But Katzman says Yahoo decided that it could give readers a better experience on its own network. That’s because Yahoo has other mechanisms, including a powerful personalization algorithm, that helps serve up suggestions of other articles a reader might be interested in. If Yahoo were to embed its content on Facebook, it wouldn’t be able to leverage the algorithm.

“We understand all the signals. We understand how [the social elements] work with all the rest of our properties,” Katzman says.

And, of course, bringing readers over to Yahoo ensures that Yahoo keeps all revenues from ads served against its own content. While not divulging growth projections, Katzman says Yahoo believes the social elements will drive more consumption of content from the company’s many sites.

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“There’s a very strong indication we should see a significant engagement lift,” Katzman says. “More time equals more revenue from advertising.”

The social elements are currently only available on Yahoo’s News site to readers based in the United States. The company will be testing the features on other verticals and in other locations around the world during the last quarter of 2011, and it plans to roll them out to the entire Yahoo content nework globally in the first quarter of 2012.

“As soon as everything is looking good, we want to turn in on everywhere as fast as possible,” Katzman says.